Impact of the Coronavirus Pandemic on the Global Economy
There is no doubt that facing the outbreak of the Corona epidemic represents one of the unique challenges of the global economy, as it led to facing a new financial crisis of greater impact than the financial crisis that passed on the world in 2008, as it brought the global economy into a state of severe recession, since the rapid spread of the Coronavirus represented a painful blow to the global economy, which had begun to witness a state of recovery and slight recovery from the previous financial crisis, as this crisis would add momentum to some of the changes that occurred in the global economy. The damage depends on how quickly governments and how effective their policy is to contain the epidemic.
Most of the economic forecasts for 2020 predicted a year of steady growth, if not increased growth. The update to the IMF’s forecast for January saw a rise in growth from 2.9% in 2019 to 3.3% in 2020. There were many reasons for optimism, Including the trade agreement “phase one” between China and the United States, and reducing the impact of Britain’s exit from the European Union.
The World Bank expects a drop in the economic activities in the rich countries for about 7%, as Coronavirus pandemic affects the national offers and demands ; the trade and finance activities.
Emerging markets and developing economies are expected to contract by 2.5%, the first collective contraction in at least 60 years. At the same time, per capita income is expected to decline by 3.6%, throwing millions into poverty.
There is no doubt that the most affected countries are the oil-exporting countries, as well as the exporting countries in general. These countries will lose more than 1% of their growth, in addition to those that have strong economic relations with countries that will be greatly affected by the economic shock, and countries such as Canada, Mexico, Central America, the countries of East and South Asia and the European Union will witness a slowdown in growth ranging between 0.7% and 0 .9%. Also, the countries that have strong financial relations with China, their economy may be more vulnerable to the Corona crisis.
In the Arab countries, potential global demand will decline by at least 50%, including both Arab oil-exporting and importing countries, which will be reflected in external demand levels, which amount to 48% of GDP.
Hence the possible decline in oil and non-oil exports. In particular, the Arab economies will be affected by the slowdown in demand among a number of their trading partners, as the countries affected by the virus are currently considered among the most important trading partners of Arab countries, as they absorb 65% of Arab exports.
The continued spread of the virus will affect many sectors in the Arab countries, the most important of which are the productive services sectors, especially the tourism, transportation, and domestic and foreign trade sectors. It will also have an impact in some other sectors, such as the iron and steel industry.
And with the collapse of the oil price, that became the contributing factor to the anxiety. For this reason, it is difficult to predict the movement of the markets, which makes the global situation worse and heralds a wave of severe recession.
Certainly, the post-Corona world will differ in a lot from what came before it, as the huge financial losses, closures, and movement restrictions are all unprecedented challenges that occurred to the world and there is no doubt that they will push many governments, countries, and even companies and individuals to reconsider their economic behavior in the post. Corona to avoid a repeat of this scene and its difficulties again.
Dr. Kamel Djoudi